Monday, June 23, 2008

Homeownership and the Dream

“'Owning a home lies at the heart of the American dream.'[. . .] Oops."

Paul Krugman's Monday column is a smart look at one piece of the American dream I also questioned in my column last week: homeownership.

"Why should ever-increasing homeownership be a policy goal? How many people should own homes, anyway?"

Are you less of a citizen, less involved in your community, if you don't hold property?
Is it less savvy financially if you choose to spread your investment risks rather than sink most of your net worth into a single purchase made on margin?
Is the mortgage deduction really fair to those of us who choose to do other things with our money?
And what about the benefit to the planet of living in denser, smaller, more efficient apartments, with less space for stuff, rather than moving out to the suburbs just so you can afford a house?

Taking all this into account, my husband and I do still dream of owning a piece of property at some point--Paul Krugman admits he's a homeowner too.
I think the major advantage to me is the sense of long-term rootedness in a community, especially for raising children. But the fact is that that stability is hard to come by in today's economy, or it least can take a while. My industry, while centered in New York, is completely volatile; my work takes me all over the East Coast and to the West Coast several times a year; my husband's company is less than 10 years old and is headquartered on the West Coast; and my family and friends are pretty well scattered too.


Anonymous said...

No, most people wont own homes in the future. That is what happens with Globalization. Perhaps the top 10% become richer, but everyone else gets poorer. If you are in the middle class it would be naive for you to expect the lifestyle that your parents had. Also getting a home in the far out suburbs is a terrible idea with energy the way it is. Flying in planes, owning a home, going to college will become more "elite" activities. One writer from Germany thinks that the suburbs in the U.S. will become the ghettos and the ethnic ghettos already existing in major cities will be pushed further out. Also, I see most middle sized cities completely dying. Only large, global cities will prosper. Think Chicago, New York, San Francisco. Kiss goodbye: Detroit, Cleveland, Indianapolis. This is the final phase of capitalism. This is the part when capitalism devours itself by outsourcing, insourcing of (slave laborers), destruction of the middle class. The problem lies in the fact that once the middle class is dead, there aren't any people to buy all of the crappy products made in China. Save the money you have. Be very careful investing in American stocks. Live near your work. Don't believe that any American politician (Obama) can stop this process of globalization. These are forces much larger than any one country. Be realistic!

Anonymous said...

Homeownership looks like a dream for those people who have a family and future in mind, but the world is also plenty of lonely people who don't really need to own a house.

Anonymous said...

Most Americans will have to get used to declining living standards and all that entails. People wont be able to go out to eat as much, drive as far in their car, buy that fancy technology. Everything will slowly devolve. I feel sorry for the young generation now. Maybe these tight times will teach some character development, which is sorely lacking in our society.

akashra said...

Aww.. I'm disapointed. You have a husband :p.

SK-S said...

Perhaps we can discuss if it's worth it to buy when renting has become completely unafforable and paying a monthly mortgage is much cheaper.
This is true where I live, Baton Rouge, LA.

Unknown said...

In my case, the rent vs. own situation was helped by the skyrocketing rents on Long Island. I lived in Astoria, NY for years and when I married my wife and became stepfather to her 8-year-old son, I started looking for a place for us to live that had a decent school district. Getting a larger apartment in Astoria was out of the question by that point. In the ten years or so I had lived there, rents around me had more than doubled. My landlord kept my increases at a reasonable rate because I was a good tenant and he wanted to keep me. So Astoria being out of the question, I started looking on Long Island. The Sachem school district was always voted in Newsday's list of top schools, so we moved into a nice rental community where my stepson could ride his bike, swim in the community pool, and get a good education. After a while, $1800 in rent per month for a two bedroom, two bath apartment started to look stupid. It was throwing money away. With help from my parents with a 3% downpayment, which really only covered the closing costs, we moved into a house in the same school district. Tax and mortgage payment was less than I was paying in rent, and then there's that deduction for the interest. It just made sense. Even though the equity in my house probalby hasn't gone up in the years since I got it with the housing bubble bursting, I still feel it was the best thing for my family and our budget. The only way it would've made sense to keep renting is if we could've found affordable rent in a decent neighborhood. Anything less than an equivalent mortgage payment out here on Long Island doesn't get you much in a rental.

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